Form W-9 for an LLC: How Should Limited Liability Companies Fill Out a W-9?
Limited Liability Companies (LLCs) are popular because of their versatility, simplicity, and security. The W-9 Form, on the other hand, is a document used by the Internal Revenue Service (IRS) to collect information on individuals or businesses they must report on.
A Limited Liability Company is unique in terms of tax treatment, and this can make completing a Form W-9 more complicated and unclear.
This blog will provide a clear picture of Form W-9 and how to fill it out for your LLC. The key takeaway is, “How do I fill out Form W-9 for LLC?”.
1. What is a Form W-9 used for?
The IRS W-9 form provides information about a freelance worker or contractor. This information comprises the independent contractor's or freelancer's name, address, and taxpayer identification number (TIN). Using this data, the business that hires freelancers and contractors creates Form 1099 and reports it to the Internal Revenue Service. Form W-9 is officially termed "Request for Taxpayer Identification Number."
2. W-9 Form: Who needs it?
Now that you know what a W-9 is, you may wonder, "Who needs it?" A freelance or independent contractor who renders service for a business will be required to complete a W-9 form if their annual salary is $600 or more. This also includes LLCs who receive more than $600 in payment from a business partner. This is one of the primary reasons to learn how to fill out a W-9 form for your LLC.
3. Filling out a W9 Form for your LLC: Things to Understand
Filling out a W-9 for the first time might be challenging. You will eventually learn to fill it out automatically. Although the information needed to complete a W-9 is the same for all businesses, you might need help to complete the following fields as an LLC.
1. Name/Business Name
What to fill in Lines 1 and 2 is one of the most common inquiries that LLCs face. It’s a simple thing. It is determined by how your LLC is classified for federal tax purposes.
- If your business is a single-member LLC (a disregarded entity for tax purposes), Line 1 must have your name, and Line 2 should contain the name of your LLC or DBA (Doing Business As).
For example, if you are the Hallen Smith LLC owner, enter "Hallen Smith LLC" on Line 2 and your entire legal name, Hallen Smith, on Line 1.
- If you are a multi-member LLC treated as a Partnership, S-corporation, or C-corporation, fill out Line 1 with your business name and Line 2 with a business, trade, or DBA name.
2. Federal tax classification
The IRS Form W-9 states, “Check appropriate box for federal tax classification,” on Line 3.
The options include:
- Individual/sole proprietor/single member LLC
- C Corporation
- S Corporation
- Limited liability company and Others.
Line 3 should be checked based on how your LLC is classified.
- Check the first box if you submit your W-9 as a Single-member limited liability corporation (LLC).
- The limited liability company box is for LLCs treated as partnerships or corporations. Check this box if this applies to you, and use the blank space adjacent to the box to indicate other details regarding your LLC: mark ‘P’ if your LLC is treated as a partnership or a ‘C’ or ‘S’ (depending on the type of corporation in question) if your LLC is treated as a corporation.
3. Taxpayer Identification Number (TIN)
Finally, this is the most important section to fill out a Form W9 for LLC. Here, you can fill in either your Social Security number (SSN) or Employee Identification Number (EIN) based on the following conditions:
- You can enter your Social Security number (SSN) if you fill in as a Single-member LLC.
Note: If you are a resident alien, you may enter your IRS Individual taxpayer identification number (ITIN) in this box (resident aliens are not eligible for SSNs).
- You can enter your Employment Identification Number (EIN) if you fill in as a Multi-member LLC classified as a partnership or corporation.
The abovementioned fields are where the complexity lies. The other mandatory fields, such as address, exemption codes, etc, can be filled out according to how they apply to your business.
How to Complete and Share a W-9?
Typically, when a business paying you asks for the Form W-9, you may download the W-9 Form from the IRS website, fill it out, and print it. Gone are the days when you had to go through this tedious process, as now you can go completely paperless and effortlessly, courtesy of the Fillable W-9 Solutions. Using an online fillable W-9 solution, you can efficiently fill out a W-9, e-sign it, and share it electronically in minutes.
Comprehending the complexities of tax documentation—such as Form W-9 for your LLC—is essential for maintaining tax compliance. Providing correct information ensures smooth interactions with the business that requests your W-9. By mastering the process of filing Form W-9 for your LLC, you enable your business to thrive in a compliant and structured manner. May your tax season go well and your business flourish!